In a market characterized by caution and anticipation, Philippine shares experienced a notable decline on Tuesday, June 4, 2024, as investors anxiously awaited the release of May inflation data.
The Philippine Stock Exchange index (PSEi) fell below the crucial 6,400 level, shedding 1.3% to close at 6,386.42, while the broader All Shares index also dropped by 0.92% to settle at 3,439.04.
Sectors in the Red, Led by Holding Firms and Mining
The market’s downturn was broad-based, with all sectors closing in negative territory. Holding Firms and Mining and Oil led the decline, followed by Property, Industrial, Services, and Financials. This widespread sectoral weakness underscores the prevailing concerns among investors regarding the potential impact of rising inflation on the economy and corporate earnings.
SM Investments’ Decline and Foreign Selling Pressure
A significant contributor to the market’s downward trajectory was the decline of SM Investments Corporation, a heavyweight in the PSEi. The company faced strong net foreign selling, amounting to a staggering PHP754.35 million – its highest level this year.
This substantial outflow of foreign capital further exacerbated the pressure on SM Investments’ stock price and, consequently, the broader market.
Peso Holds Steady Amidst Dollar Strength
Despite the stock market’s decline, the Philippine peso managed to close flat on Tuesday, ending the day at 58.71 against the US dollar. The local currency started the day on a weaker note at 58.62, compared to the previous day’s opening of 58.47, before fluctuating between 58.58 and 58.75 throughout the trading session.
BSP Governor’s Perspective on Peso Movement
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. addressed reporters’ queries regarding the peso’s potential breach of the 59-level against the dollar. Remolona emphasized that the central bank’s focus lies more on the currency’s trajectory rather than specific levels. He reassured the market that the BSP will continue to provide guidance and intervene when necessary to maintain market stability.
The BSP Governor attributed the peso’s recent depreciation to the overall strength of the US dollar, which has appreciated against most currencies worldwide. Since the beginning of the year, the peso has depreciated by 5.4% against the greenback, reflecting the global trend of dollar dominance.
In Summary
As investors eagerly await the release of May inflation figures, the market’s cautious sentiment is likely to persist in the near term. The potential for higher inflation readings could further weigh on investor confidence and market performance.
However, the BSP’s proactive stance in managing the peso’s movement and maintaining market stability offers some reassurance amidst the prevailing uncertainties.
Sources: THX News, Business World, PSA, PSE Edge & Philippine News Agency.
